Surprising crop reports, a disease report and two lawsuits top last week
Harvest is ramping up here in Wisconsin as the weather cools and producers want to beat the first frost to the field. Things are also ramping up here at the Feed & Grain office as the press date for our Oct./Nov. issue gets closer. So, if you missed some of last week’s biggest news (there were some big developments) in all of your pre-harvest preparations — here it is handy shortened form.
The top news stories for the week of Sept. 16 are …
The USDA lowered its estimated soybean levels by 70 million bushels over last month. This shouldn’t be much of a surprise due to the late planting season for soybeans and the drought reemerging in key states during a key developmental period. What is a surprise is the increase in estimated corn yields, increasing the estimated total harvest by 80 million over last month. As with soybeans, a late planting along with the drought in the Corn Belt during key times makes many experts skeptical of the corn numbers, but more accurate numbers should come in as harvest moves forward.
Just like last year’s battle in California over GMO labeling, things are turning ugly. In just the last few weeks, the pro-labeling side of the debate has gone from a position of dominance in donations, to being vastly outspent. That’s because of large multi-million dollar donations by companies like Monsanto and DuPont, along with the advocacy group the Grocery Manufacturers Association. The Grocery Manufacturers Association is being sued over its $2.2 million donation by the pro-labeling group Moms for Labeling. The lawsuit claims that the group needs to disclose who donated the money used to fight labeling and to register as a political committee if they wish to donate to specific ballot measures.
For the first time ever, the Centers for Disease Control has reported a connection to antibiotics used in livestock to increasing bacterial resistance that is the estimated result in the deaths of over 23,000 people a year. CDC Director Thomas Frieden is calling for a scale back in antibiotic use and to start regulating their use across all uses. The low but constant dosing in the animal agriculture sector are said to be ideal breading grounds for these super bacteria, though overuse in the medical field is also a problem. The Animal Health Institute states that the problem is being overblown, and that livestock antibiotics can only be linked to two of the 18 noted threats.
There was a fire at Cargill’s Soybean processing plant in Raleigh, NC, on Friday the 13th. The sprinkler system in the facility was effective in subduing the initial blaze, and the fire was under control by 10 p.m. Even so, firefighters stayed on the scene as the soybean smoldered due to the risk of explosion.
In what is being called the "largest tax and securities fraud scheme in Indiana history," Craig Ducey, Chad Ducey, Chris Ducey, Brian Carmichael, Jeff Wilson, Joseph Furando and Evelyn Katirina Pattison are being charged with fraud from knowingly selling lesser biodiesel. The defendants sold 35 million gallons of the biodiesel B99 as B100. The Renewable Identification Numbers they received where worth about $2 more than B99. Not only were they claiming that the fuel was more valuable than it was, but they were relabeling fuel that they had purchased not produced. This means that the RINs had already been claimed for that fuel by the company that manufactured it, and the defendants were claiming again. Prosecutors say that the defendants cheated their customers out of $55 million and the IRS out of $35 million.
Well those are the top five. I want to remind you to email me if you have any story ideas, comments on what news you want to hear about, or just to say hey. Subscribe to Industry Watch, follow us on Twitter or like us on Facebook for all the latest news in the industry.
A grain barge that was reported missing on Sept. 6 was luckily found by a passing tug boat. When found, it was floating down the Columbia River with no lights and no crew. The barge was found before it sustained or caused any damage, which would have been an easy feat for an unmanned but loaded 252-foot-barge. The workers at the dock where the barge was released say that the moorings that held it in place seemed to have been loosened. The barge was headed to one of the ports who have locked out the International Longshore and Warehouse Union since last spring. The union denies having any knowledge of the potential sabotage, but notes that private security and the strikebreaking firm should be examined just as closely during the investigation.
Cargill has named its current president, David Maclennan, as its next chief executive officer. Maclennan has been with the company since 1991 and has held a variety of top executive positions over the last five years. The current CEO, Greg Page, will still be active in the company as the new executive chairman.
It seems that the state of Washington’s legal battle for GMO labeling is where Monsanto and DuPont have decided to stand their ground. Both companies made multimillion dollar donations this past week, propelling the funds of the anti-labeling side of the debate well above those of the pro-labeling side. This is a similar to the California vote that took place last year, where the anti-labeling campaign raised almost five times as much as the pro-labeling side. The California vote was only won by 4%, and with over twenty states bringing similar legislation, two have already passed the measures, it’s unclear if these new donations will be enough.
Iowa’s late season heat wave may have been responsible for a feed ingredient to combust and start to smolder. When the employees at the Gilbert office of Key Cooperative were notified of smoke coming from the bin, they called in local firefighters. The smoldering grain was quickly doused by the firefighters. Luckily, there were only three tons of feed in the bin at the time and though that feed is lost, there is only minor clean-up and water damage to deal with.
A group of organic farmers, seed companies and public advocacy groups sued Monsanto in 2011, to stop Monsanto from suing farmers who have their fields accidently contaminated with Monsanto’s patented genetically engineered crops. The first judge to hear the case issued a ruling that the lawsuit was preemptive, and cited Monsanto’s public stance that it wouldn’t sue farmers in the case of accidental exposure. This June the U.S. Court of Appeals for the Federal Circuit upheld the ruling. That same coalition is now appealing to the United States Supreme Court, hoping for a different outcome. Monsanto released a statement accusing these groups of trying to stir up nonexistent controversy.
Check out the digital issue for Aug/Sept. here. I want to remind you to email me if you have any story ideas, comments on what news you want to hear about, or just to say hey. Subscribe to Industry Watch, follow us on Twitter or like us on Facebook for all the latest news in the industry.
Corn moves North by barge and rail to the Midwest in an attempt to replenish tight pipeline supplies
Corn and soybean spot basis were hammered this week as end users see some relief from newly harvested southern crops. For the week, spot corn basis was off 50 cents a bushel while spot beans were off 35 cents a bushel.
In the corn market, early season harvesting in the South continues to move by barge and rail to the Midwest in an attempt to replenish tight pipeline supplies. As a result, basis levels have moved sharply lower in the past few weeks with little if any premium being offered by buyers for old-crop delivery as compared to new-crop delivery. Ethanol plants were a big mover to the downside losing 38 cents a bushel on average as a group, while some Eastern Cornbelt plants were lower by a $1 a bushel. On the river terminals, followed in sympathy but were only down by 28 cents a bushel, as they have been out of the market for some time and their basis had not kept pace with the lofty prices paid by end users.
For soybeans, it was much the same story as Eastern Cornbelt markets were hardest hit, largely taking out the premium they had been offering for the later half of the marketing year. Bean plants were off 40 cents a bushel on average as compared to river terminals which saw only a more modest 20 cent erosion.
Spot basis should continue to fall, but we would expect it to be short lived as full swing harvest in the Midwest is a ways away. With basis levels taking and nearly on par with new-crop delivery, the economic incentive for farmers to harvest wet corn early will likely be muted, and could lead to a mini recovery in the first part of October.
September is here and it’s posed to be a big month. What the media is calling a “flash drought” is creeping through the Corn Belt and looks to make the coming harvest more difficult than anyone would like. The farm bill may get put on the back burner now that congress is back in session due to Syria, but we may finally have an answer to whether Smithfield gets sold later in the month. This week is all about company business as agriculture companies try to find new ways to increase revenue.
Cargill broke ground on a new facility in Hedrick, IA, that will be able to produce 350,000 tons of hog feed once fully operational. It is located near important transportation systems and is expected to be able to better supply Cargill operations in Iowa, Missouri and Illinois. The company cites growing demand and a more streamlined supply line for its buyers as motivation for expansion. The plant is expected to be complete near the end of 2014.
Members of Hillsboro Farmers Cooperative approved a merger with a United Cooperative owned subsidiary through a mail-in vote in late August. This merger continues a United Cooperative effort to continue to expand throughout Wisconsin, and will be the fourth merger the company has taken part in since 2011. The merger will be finalized Oct. 1.
The Smithfield merger with Shuanghui International has faced a lot of opposition and will more than likely continue to do so until its shareholders vote on the deal Sept. 24. But Starboard Value LP, who owns 5.7% of Smithfield, has already announced that they will vote no. In an open letter to other shareholders, Starboard Value LP claims that they’ve received interest from a group of companies that would like to make a bid to collectively own Smithfield. This new offer could potentially be higher than the one offered by Shuanghui International, and Starboard Value claims that it would offer a better value to shareholders. The issue is time. Starboard Value says it will need more time to put the proposal together. If unable to put a new proposal together, Starboard will change is vote to yes before Nov. 29, the last day the deal can be finalized.
Wildcat Minerals LLC has partnered with CHS to build frac-sand unloading facilities alongside its grain elevators. For now, the frac-sand facilities will be built next to a relatively small number of elevators near the Bakken oil formation, which covers portions of Montana and North Dakota and spreads into Canada. The two companies are looking into expanding the deal to other locations including Colorado and Oklahoma. CHS’s extensive shipping network, combined with only being truly busy during harvest season, makes them attractive to frac-sand operations.
Cargill continues to invest in improvements across its network. The company will invest $48 million in its Dodge City, KS, beef packing facility. The improvements will replace systems that have been in place since the plant opened and improve the plant’s capacity by 130,000 boxes. The upgrade will start at the end of this year and is expected to be finished by spring 2015.
The digital edition of August/September is now online! Check it out here. I want to remind you to email me if you have any story ideas, comments on what news you want to hear about, or just to say hey. Subscribe to Industry Watch, follow us on Twitter or like us on Facebook for all the latest news in the industry.
Corn basis dropped 15 cents as new crop supplies become more available in northern states
This week we saw corn drop 15 cents between Tuesday, September 3rd and Thursday, September 5th. Basis was pulled lower by the southern harvest and grain movement up river. Soybeans picked up a penny during that same time period in a lull before harvest pressure begins to weigh on the market.
Corn dropped on average 15 cents this week as the market finished rolling out of September and into the December contract. On average Ethanol provided little support in the cash market tumbling 15 ½ cents this week as well. Harvested southern corn is impacting the cash market significantly and pressuring basis lower. In the week of August 24th to 31st more corn floated up river on barges (53,900 tons) at lock 27 than corn headed downriver (23,572 tons) helping to supply inland grain demand. The effects of harvest should continue to pressure corn basis throughout the U.S as we move deeper into September.
Soybean basis improved by a penny this week between September 3rd and the 5th. The market was mostly mixed with Soybean plants dropping basis by an average of 5 cents, while the average basis at river terminals increased by 1 ½ cents.
The last few weeks of August brought a lot of announcements of new investments in infrastructure.. Showing that, at least for now, the agriculture market doesn’t seem to be slowing down, on the national stage. As Labor Day passes and harvest season inches closer, the agriculture community seems to be holding their breath, waiting to see how the harvest turns out. Even though there is some concern over drought emerging in the Corn Belt and the risk of frost, most seem optimistic about it.
Three men apparently stole a 1975 Ford grain truck from a private residence in Lincoln County, MO, right outside of St Louis. They simply drove the truck through a wall of the building it was housed in.. Though it is unclear who, one of the men drove the truck off the road and subsequently set it on fire. Mitchell Houston and Adam Bote had previously been arrested and admitted to the burglarizing and stealing, but both blamed the other for setting the truck ablaze. Zachary Hill was arrested about a week after the other two men. All three are charged with burglary, two-counts of tampering with a motor vehicle and property damage. Hill and Bote are also charged with knowingly burning. The bail is set for $75,000 for Hill and Bote, and $100,000 for Houston.
CHS Inc. and Dakota Plains Cooperative have taken the first steps towards a merger by seeking their respective boards of directors to approve it. This merger will help CHS inc. meet its goal of enhancing its agronomy assets in east and central North Dakota. Those plans also include the possibility of building three new fertilizer plants in the Dakota Plains Cooperative trade area in order to take advantage of a fertilizer manufacturing plant in Spiritwood, ND.
The Canadian Pacific is close to selling the western part of Dakota, Minnesota and Eastern Railroad. They have reported four to five interested parties and are reportedly close to making a deal. South Dakota grain elevators fear the possibility that the rail will be sold to a short-line railroad. If sold to a short-line, who would have to make a deal with The Canadian Pacific for access to an international network, it could mean that there would only be one way out. This could mean an increase in rates for the elevators that use the railroad.
Pilgrim’s Pride is investing a total of $25 million in its Alabama operations. The plan includes building a $15 million feed mill in Pinckard, AL, and $10 million in upgrades to its poultry processing facility in Enterprise, AL. The news came shortly after Pilgrim’s Pride announced it would be closing its facility in Batesville, AR. The mill will begin construction in September and the upgrades will be made over the next six months.
Washington State Grain Inspectors no longer feel safe crossing the International Longshore and Warehouse Union’s picket line at the Port of Vancouver, WA. Reports of threats from the picketers, including an instance where a picketer opened an inspector’s car door in order to scream at them, has caused inspectors to threaten to stop inspections unless the two parties reach a solution by the first week of September, or more steps are taken to ensure their safety. The Pacific Northwest Grain Handlers Association says that grain flow is unlikely to stop because they believe that federal inspectors will be forced, by law, to take over the inspections. The Port of Vancouver claims that they have enough security in place to protect all parties involved. The lockout has been in place since February and though both parties claim that they have tried to resume talks, both say that the other group has been unresponsive.
That’s it for this week. I want to remind you to email me if you have any story ideas, comments on what news you want to hear about, or just to say hey. Subscribe to Industry Watch, follow us on Twitter or like us on Facebook for all the latest news in the industry.
After a night of drinking, Donald Julian Ellis broke into a grain elevator in Page, ND owned by The Arthur Companies. He proceeded to smash up the elevator’s office, throwing around office supplies and furniture before emptying a fire extinguisher over the wreck. Ellis then smashed a grain truck into a concrete slab causing significant damage, but then proceeded to steal another company truck and drive home. Ellis admitted to the acts when confronted by police the next day, as well as being intoxicated while performing the acts of destruction. He claimed that someone the night before had told him to jump off the grain elevator and that he had broken in and caused the damage to “show everyone how big of a man” he was. Donald Julian Ellis is now charged with burglary, theft and criminal mischief felonies as well as one count of unauthorized use of a vehicle.
Tyson banning Zilmax was the top story for the week of the Aug. 12 and has had ripples throughout the meat processing industry. Even though Cargill has stated that it has not had any issue regarding Zilmax, they followed suit and banned the supplement effective Sept. 30. Merck & Co., who manufactures the supplement, suspended the drug pending a scientific audit. Merck &Co. has stated that they have had no experiences like those cited by Tyson as its reason for banning the supplement, but decided to suspend the sale of Zilmax until the allegations are sorted out. Zilmax and similar drugs can add 30 pounds of muscle to cattle, and have been necessary in recent years due to dwindling herds. Tyson banned the supplement after reports of cattle arriving to be slaughtered unable to walk on their own.
The U.S. Department of Labor's Occupational Safety and Health Administration cited Greg Sikes Farm LLC, with six violations totaling $127,400 in proposed fines. This comes after an incident last fall, where an employee became entrapped while trying to remove soybeans jammed in an auger. The violations include:
Two willful violations
Failing to ensure the screw auger is locked out when workers are inside the bin
Provide workers a body harness with a lifeline upon bin entry
Six serious violations
Failing to develop an emergency action plan
Providing annual training on grain handling hazards
Obtaining permits addressing bin entry procedures and requirements
Failing to equip the workers who entered the bin with rescue equipment
Allowing workers to walk on the grain
Not ensuring that an observer was stationed outside during bin entry or was equipped to provide assistance in case of an emergency
For more information on following OSHA bin entry guidelines click here.
Last October, a worker fell into a sweep auger when sweeping a grain bin in preparation for another shipment. The man claims he was taught by his supervisor to merely slow the auger down, rather than turn it off, as required by The U.S. Department of Labor's Occupational Safety and Health Administration. The man sustained injuries to his head, right eye, right arm, right leg, a broken jaw and heavy bruising. The courts found the company at fault and ordered it to pay the worker an additional $26,000 in emotional damages on top of the $20,000 for medical expenses, as well as a $35,000 fine.
Shareholders will now have a date to decide if Shuanghui International Holdings Ltd. will be able to purchase industry giant Smithfield on Sept.24. The merger has gone over many obstacles including concerns from the U.S. Government. The U.S. Securities and Exchange Commission must first approve the sale, a decision expected to be made by Sept. 6.
Well those are the top five. I want to remind you to email me if you have any story ideas, comments on what news you want to hear about, or just to say hey. Subscribe to Industry Watch, follow us on Twitter or like us on Facebook for all the latest news in the industry.
Corn basis improved 3 ¼ cents on average supported by tight stocks and a less dramatic rally in the futures market
Soybean basis dropped sharply, falling 25 cents throughout the country. The explosive rally in the futures market helped increase farmer selling causing grain buyers to back off old crop basis. Corn basis improved 3 ¼ cents on average throughout the country supported by tight stocks and a less dramatic rally in the futures market.
Soybean basis weakened sharply at crush facilities which slipped 35 cents on average throughout the country. Despite a mostly unchanged Gulf basis, river terminals also posted basis declines, dropping on average 18 ½ cents.
Spot corn bids at ethanol facilities improved 4 ¾ cents this week despite a weakening crush margin. Recent rallies in old crop corn futures combined with lower ethanol and DDG prices have cut ethanol margins in Iowa to just $2.04 per bushel, down nearly 50 cents per bushel since the beginning of the month. Tight old crop stocks and lagging new crop maturity should continue to support old crop corn basis throughout September.
Important news for feed and grain industries still trickles through
Early this month I read a blog that said August was a notoriously slow news month. Congress is on summer hiatus, farmers are in the field and it seems like much of the country is taking that last summer vacation before school starts. Going through the headlines this week was a struggle to find relevant information for readers, a job I take seriously. What came out of my search were stories that may not have had gripping headlines, but ultimately may be tremendously important to the feed and grain industries’ present, and may be a look at what its future has in store.
Tyson became the first of the leading four meat companies to ban the supplement Zilmax, used to add about 25 pounds of muscle per cattle carcass. Zilmax is widely used throughout the industry, and this announcement came as a surprise to many producers, who only have until Sept. 6 before Tyson stops accepting cattle fed Zilmax. Experts are concerned about the impact this will have on food prices, especially if the other large meat companies follow suit. Tyson’s official reason for banning the supplement is an increasing amount of cattle being brought to be processed that have difficulty walking, and in some cases are unable to move. Though it is unknown if Zilmax is to blame for this, Tyson's ban has attracted the attention of the FDA, who promised to . Merck & Co. have of the supplement, pending a scientific review of the drug. The reason behind the ban may be less benevolent than it appears, many experts are wondering if Tyson is simply trying to gain a larger share of the export market. Many nations have outlawed many, if not all, drugs used for the production of meat.
Working for Feed & Grain has changed my life in many ways, but one of the most amusing is that as I drive along the Wisconsin country roads, I notice the fields on either side on me. And right now corn seems to be flourishing on one side and abysmal on the other. That’s why I’ve been surprised at every other USDA report. The crop looked good, for the most part, but record breaking? Well, it appears they were right now that they’ve taken farmer survey and field plot measurements into account for the first time this year and are still predicting a record crop. The USDA lowered the estimate a little, but it still looks as if there will be a lot of corn and soybeans being harvested. Now we all have to hope that nature cooperates, and the frost isn’t early this year.
The seemingly high level of grain-related deaths this year, or at least the high profile of those that have happened, has pushed the issue to the forefront of the minds of many first responders in rural communities. Programs dealing with the types of situations that one would encounter in a grain silo are being offered by universities that are active in agriculture. This is a situation that may not have been encountered by many first responders, and one that time is of the essence. Having training beforehand may allow responders to act a few minutes early, and in the case of grain engulfment, a few minutes may be the difference between life and death. This particular course is being offered at Kansas State University, but a reader brought to our attention a similar course being offered at Texas A&M. If you ever have information you wish to share about an article, please feel free to post a comment!
The American Feed Industry Association has contacted the FDA asking whether a HACCP Plan or certification is required under the Food Safety Modernization Act. The FDA responded that the widely accepted HACCP Certification is, in fact, not required, and a facility only needs a hazard identification plan, and a written risk management/preventive controls plan. Though the AFIA still suggests a HACCP plan as the best option, it’s critical that feed facilities know it isn’t a requirement.
Brazil is the United States’ biggest competitor when it comes to corn exports. With infrastructure problems, and acre yields well below their potential, Brazil could foreseeably exceed the United States in production if these problems aren’t addressed. The main reason is Brazil’s ability to produce a second harvest every year, while the Corn Belt is covered with snow for half the year. Since 2000, Brazil has doubled its corn production, and this may not be a terrible thing for the United States. As we all know, by 2050 the population will spike to over 9 billion people, which means there will be a lot more consumers, and with improvements to the yield per acre slowing down in most of the developed world, our best chance to meet the demand might lay in the underdeveloped tropics.
Feel free to email me if you have any story ideas, comments on what news you want to hear about, or just to say "Hey." Subscribe to Industry Watch, follow us on twitter or like us on Facebook for all the latest news in the industry.
The national average corn basis slipped 2 cents this week while soybeans pushed 8 cents higher
Cash market volatility continued this week as tight near-term supplies combined with an outlook for ample production in the coming months keep buyers moving basis erratically. For the week, corn posted an average gain of 2-cents a bushel, while soybeans were up 8 cents on average.
In the corn market, basis levels at the Gulf were higher for the week, but rising barge costs are keeping river terminals steady to even in some cases weaker on basis levels. Barge rates had been climbing in the past two weeks but have started to stall out in recent days. For ethanol, average gains across all plants was 2 cents a bushel for the week, but Western Cornbelt plants had numerous plants with double-digit gains, especially in the Upper Midwest were new-crop corn harvest will likely be late to arrive this year. Weekly ethanol grind was up 4,000 BPD rising for the third straight week in a row.
For soybeans, river terminals were weaker on average, falling 5 cents a bushel on the heels of higher barge freight and a falling Gulf market. For soybean processors, basis levels were mostly weaker but extreme volatility was common across plants as some buyers boosted basis by 20 cents or more while others were dropping basis. The NOPA’s monthly crush report for July showed 161 MB of total crush for US soybean plants, off marginally from the June number of 163 mb.